Is forced labor & income inequality in your grocery cart?

4 December 2018 1:52pm

How long would it take a woman processing shrimp in a typical Indonesia or Thai facility to earn what a CEO of a major grocer takes home in one year’s salary? 4,000 years. It’s just one of the disturbing statistics shared by Oxfam’s #BehindTheBarcode campaign to raise awareness into forced labor in the Food & Beverage supply chain. As part of the campaign, Oxfam scored major supermarkets serving the UK based on the policies and practices that they have implemented to prevent human rights abuses—from paying poverty wages to unsafe and unsanitary working conditions. German grocer Aldi, which has 10,000 stores across 20 countries, rated only 1 percent on Oxfam’s Supermarkets Scorecard, but not a single company achieved higher than 23 percent. Clearly, identifying force labor risk in supply chains presents challenges. What can organizations do to better mitigate the risk?

Set a high standard addressing and monitoring for forced labor risk

The pressure for large supermarkets to keep prices low often places undue economic pressure on the small-scale farmers and workers that keep the produce shelves stocked. Laws like the UK Modern Slavery Act and the California Transparency in Supply Chains Act require companies to publish a statement outlining their commitment to keeping modern slavery out of their supply chains. Such public pledges may be helping. Oxfam’s report “Ripe for Change,” which looked at the trading practices of the 16 largest supermarkets in the German, the Netherlands, the UK and the U.S., rated four Germangrocers the lowest, in part because the supermarkets keep over 50 percent of the prices paid by customers, while less than 8 percent goes to small-scale farmers and workers. Forced labor and unfair trade practices include a number of abusive practices:

Mandatory overtime—Workers spend long hours for low wages, with no additional compensation for overtime.

Excessive production targets—Workers are forced to meet impossible standards, which leads to longer hours.

Imposition of recruitment fees—Workers are charged exorbitant fees for work placements, leaving them in debt before they receive any wages.

Control of employee documents—Immigrant workers are especially vulnerable to employers who confiscate passports or other types of identification, making it difficult for workers to leave unsafe or abusive jobs.

Employer-controlled residences—Agricultural workers often rely on provided expensive, but sub-standard housing with the cost deducted from wages, leaving workers in poor living conditions and without enough money for food.

The “Ripe for Change” report notes, “It is one of the cruelest paradoxes of our time that the people producing our food and their families are often going without enough to eat themselves.”

Oxfam developed its scorecard based on international standards and expert-recommended best practices related to workers, transparency, small-scale farmers and women. For example, one best practice is having a senior executive with “explicit responsibility for ensuring human rights are respected in its supply chain.” This advice isn’t just for supermarkets, either. Regulator guidance—whether for addressing money-laundering risk, bribery and corruption risk, or forced labor risk—emphasizes that compliance starts at the top.

Another best practice: Make a clear commitment to meet the UN Guiding Principles on Business and Human Rights. Embracing these principles, as well as the UN Sustainable Development Goals, benefits people and the world. But it also benefits companies. Increasingly, investors expect companies to meet Environmental, Social and Governance (ESG) standards and consumers reward retailers who meet ethical sourcing and Corporate Social Responsibility (CSR) goals.

In addition, companies can complement initial onboarding due diligence with ongoing risk monitoring of business partners, suppliers and other third parties to identify potential problems sooner. No single organization can end forced labor on its own, but if more companies establish strong programs to mitigate the risk—and require their suppliers to do the same—it will have a positive impact on the more than 14 million people around the world who labor in homes, factories, farms, and mines due to force, fraud or deception.